Rise with SAP won't move S/4HANA needle for large customers
Rise with SAP is good for smaller companies, but if Rise is going to be a success, SAP will need to figure out how to attract its largest customers, according to two experts.
In its latest attempt to entice customers from on-premises, legacy ERP to cloud-based S/4HANA, SAP introduced Rise with SAP, a pathway to a more comprehensive modernization of both underlying IT infrastructure and a simplification of business processes.
Released in January, Rise with SAP bundles existing products and services under one contract subscription service from SAP, including S/4HANA Cloud, business process intelligence, SAP Business Technology Platform for development and access to the SAP Business Network, all on the cloud hyperscaler infrastructure of the customer's choice.
And the product is evolving quickly. At Sapphire Now 2021, SAP introduced Rise with SAP for industries, an expanded package with specific services for five industries, as well as HR and procurement functionality.
But questions remain if Rise with SAP will really move the needle on S/4HANA migrations, particularly for large enterprises that may not be the best fit for Rise's bundled services.
In this Q&A, two longtime SAP experts, John Appleby and Joshua Greenbaum, discuss the current state of Rise with SAP. Appleby is the CEO of Avantra, a London-based provider of IT operations products and services for SAP infrastructures. Greenbaum is the founder and principal of Enterprise Applications Consulting, which provides independent ERP consulting services and is based in Berkeley, Calif.
Rise with SAP was introduced in January and was billed as a simplified way to move customers to S/4HANA, but many customers still seem unclear as to how Rise works. What's your understanding of Rise with SAP right now, six months after its introduction?
John Appleby: If you're a Global 5000 customer or 1000 customer and you're running SAP ERP, you're probably moving to S/4HANA. It's a massive investment, but you're going there eventually. But there are thousands of other ERP customers that are smaller, and SAP found that those customers were struggling to make the justification to move onto S/4HANA. Strategically, that's a disaster for SAP because those are customers that are potentially lost to Infor, Netsuite or someone else. So Rise was conceived for those regular customers, not the top-tier customers. The message for those customers was one of one throat to choke -- one contract -- an automated upgrade to S/4HANA, and business process remediation and improvement. That's a message that resonates for that group of customers.
Why isn't Rise a good fit for SAP's largest customers?
Appleby: There's just a little bit of a mismatch between what it was intended to do and making it general purpose. Interestingly, the mismatch exists in the upper echelon customers where some of the pain points that Rise solves -- business process remediation, simplification, industry functionality, business networks -- doesn't work as the single contract model. This is because if you're one of the largest companies in the world, you've negotiated a better contract with Google, Amazon or Microsoft than SAP has, and you've got great pricing, which SAP can't match. You've also got enterprise agreements with companies like Mphasis to do infrastructure management, cloud management and application management that spans your whole enterprise. You don't want to slice out a piece of either of those contracts; that doesn't make sense. So how does Rise with SAP work for the large enterprise? That question is open post-Sapphire. But I also think that SAP leadership has received that message, and they'll figure it out.
Joshua Greenbaum: The thing that I push back on is the idea that it's 'one throat to choke.' It's not. It's complicated in terms of these intervening contracts and relationships. They really want to focus on having one flag to fly up the flagpole and salute, and Rise has become that. But it's a little confusing as well, because if [a company is] going to look at an S/4HANA transformation, it may not be the same team or the same stakeholders that looks at [joining] the SAP Business Network. Strategically that's a much bigger long-term game, but if you're trying to figure out your strategic position on business networks at the same time you're trying to figure out system workloads for S/4HANA, you're probably muddying the waters on one or both sides of that question.
Was this a flaw in the conception of Rise with SAP?
Appleby: If you look back 10 years, the release of HANA was flawed in its inception as well. There were major problems in the first version, which needed to be resolved. For example, you couldn't run any version of SAP on HANA for over two years. So it's okay to introduce something that isn't perfect into the market.
Also, it's not too much of a jump to create something which is relevant to those businesses. For example, the Signavio piece for business process automation demoed really well at Sapphire, and actually looked almost too good to be true. That idea of wanting to simplify business processes is critical. The SIs [systems integrators] have spent the last 20 or 30 years customizing ECC and R/3, and if Rise can help fix that with business process optimization, that's huge because the moment you customize it, you're in for a world of pain every time you upgrade because it breaks.
What will we be saying about Rise with SAP a year from now?
Greenbaum: I hope SAP is going to speak directly about getting these other stakeholders excited about Rise and not just making it look like something that the S/4HANA stakeholders are going to love. The finance component of the SAP Business Network has an impact across the board, so I'm hoping we'll have a bigger and broader dialogue about the Business Network concept, and I'd like to see more of that surface.
Appleby: There are two things. First, we need to see the success points of the first customers, the smaller customers who've done this and have genuinely made it work. Second, we need an offer that works in the large enterprises. Those are the success points that will live and die for SAP at Sapphire next year.
But let's also think about what happens 10 years out, because IT doesn't change very fast year to year. R/3 lasted 30 years; S/4HANA will last 30 years. In the last 10 years, we had the move to SaaS for line-of-business, we had the move to IaaS for everything else, and we had the march to outsourcing. We won't see that model change in the next 10 years, but it's in desperate need of optimization. Right now, the cost of running those systems is not delivering to the business cases they were made for. When people moved to the hyperscalers, they didn't do the simple things they needed to do to squeeze the cost out of it -- like shutting down systems they don't need [or] optimizing storage.
All of that IT operations work is going to be huge over the next 10 years -- to remove the need to do work manually that keeps people so busy that they can't innovate and they can't move to S/4HANA. Rise has to fit into that vision of getting upgrades done in an automated way, simplifying business processes, and making recommendations for projects, and we've removed the need for manual IT operations. That's the much longer-term play.
Jim O'Donnell is a TechTarget news writer who covers ERP and other enterprise applications for SearchSAP and SearchERP.
IT complexity slows S/4HANA migration pace